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Bear of the Day: Alteryx (AYX)

·3 min read

Alteryx (AYX) is a Zacks Rank #5 (Strong Sell) that provides a self-service data analytics software platform for data analysts and scientists. The stock has had a volatile year and is well off its highs. The upcoming quarter is crucial for the bulls to hold technical support, but estimates are trending lower, making investors nervous as we head into earnings season.

About the Company

Alteryx is headquartered in Irvine, CA and employs 1500 people. The company was founded in 1997 and focuses on providing software designed to make advanced analytics accessible to any data worker.   

AYX is valued at $7.4 billion and has a Forward PE of 140. Because of this high PE, the company holds a Zacks Style Score of “F” in Value

Rough Earnings

The stock was riding high over the summer as it approached its Q2 earnings report. The company did beat for the quarter, but guided FY20 down significantly. The stock dropped from $170 to $120 overnight, a loss of 30% just like that.

The stock held its own around the $120 mark until the company guided higher in October, helping the stock jump back above $150. However, when the company reported again in November, the Q4 guide was lowered which dropped the stock back to $120.

This week the company guided Q4 revenue slightly above expectations, but stock reacted by dropping 10%. Cleary not what the market was looking for.

Valuation and Stock Plunge

Alteryx has growth and is beating on revenue, but it is priced for perfection. The issue with the stock is that when the company reports a disappointment, the sellers come aggressively. Additionally, short sellers see opportunity to push the stock down even more, as the bulls who are leveraged are forced out.

Estimates

The company reports EPS in early February and this quarter will likely be the catalyst for the next 20% up or down. With about a month left to go, estimates have fallen 23% for the current quarter over the last 60 days. 

The bulls do have hope, as the current year number have ticked up slightly. However, given the volatility of the company’s numbers, investors should ask themselves if its worth the risk.

Technicals

The chart is all over the place, but the bulls seem to be giving up after the revenue guide last week. The $110 level is crucial to hold or the stock will likely trade in to the low $90s. The 200-day moving average is at $129 and will provide a lot of resistance if the stock can rally.

In Summary

Stocks are going up every day, but AYX continues to struggle and their volatile earnings just aren’t worth the trouble. Investors interested in the company might want to wait until the company proves itself more consistent.


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